If you are considering becoming a landlord and wish to purchase a property that you will then let out you will require a considerable sum of money to buy it plus you may also need several thousand pounds to renovate and furnish it. So, where does the money come from to do all these things?
Well, the cheapest option is to use any savings that you have accumulated to do all the above. However, not many people have the sort of funds necessary and, in any event, if they did, they may not wish to utilize all their savings for these purposes, so what is the next best option?
You will need to borrow some of the money. We say ”some of the money” because, unless it is the likes of a family member agreeing to lend you all the funds you require, a commercial lender will only lend a certain percentage of the purchase price.
The most popular way to borrow funds to purchase such a property is by way of a buy-to-let mortgage offered by the likes of the major high street banks and building societies as well as some specialist financial institutions. You will find that many such lenders will be prepared to consider lending you up to 75% of the purchase price or valuation (whichever is the lower) with you being expected to have to raise the other 25% as a deposit. Yes, there are some lenders that will consider lending up to say 85% but you may be charged a higher rate of interest.
If the property requires renovating then the lender may be prepared to advance you up to one of the aforementioned percentages based upon a projected valuation of the premises once the works are completed. With regard to raising the funds to furnish the property with the likes of white goods, beds, table and chairs etc, you could either use your savings or consider borrowing the money by taking out say a personal loan.
Obviously, you will need to make sure that the proposition is financially viable and may wish to take some professional advice in that respect. We wish you every success as a landlord.